Does self-employment always indicate entrepreneurship?

Published on 8 November 2016

Image of James Sumberg

James Sumberg

Emeritus Fellow

Picture in your mind a young woman who is balancing on her head a tray of 20 or so small plastic bags of banana chips, as she weaves her way among the vehicles temporarily stopped at a traffic light in Accra, Ghana. She obtained the pre-packaged chips on credit earlier in the day, and is trading on her own account. At this road junction there are four of five other young women selling the same chips at the same price.

What words should we use to describe her and her actions? It would certainly seem appropriate to say that she is involved in what is – or she hopes will be – an income generating activity. There should also be little dispute about the fact that she is self-employed, and part of the city’s booming informal economy. But on the basis of the information provided, is it appropriate to consider her to be an entrepreneur, and her activity as entrepreneurship?

In years gone by she would probably have been described as being engaged in hawking, street trade or petty trade, and depending on her circumstances, her trading activity might have been described as part of a ‘coping strategy’.

Today however, with influential publications like the Global Entrepreneurship Monitor (GEM) defining entrepreneurship to include “any attempt at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business, by an individual, a team of individuals, or an established business”, her activities are being seen in a very different light.

Taking the GEM definition at face value, if it is her first day trying to sell banana chips her activity should definitely be classed as entrepreneurship; however, if she has been selling chips at the same scale for some time, it might not meet either the “new business or new venture creation” criterion or the “expansion of an existing business” criterion. On the other hand, if we accept a recent proposal that entrepreneurship should be considered to be “coincident with owning and managing a business including any self-employment or trade activity”, then whether she has been selling for one day or ten years, it is still entrepreneurship.

Does any of this matter? Are these not just word games? Well, one thing is for certain – whatever you call it, her chip selling is undoubtedly very important to the young woman herself, and we must not lose sight of this fact.

I suggest that this is about much more than semantics. Specifically, the widespread acceptance within development circles of increasingly broad and inclusive conceptions of entrepreneurship should be seen as part of the on-going re-configuration of relations and responsibilities between states and citizens. Defining essentially all small-scale activities within the informal economy as entrepreneurship, and declaring that the young woman on the street corner has a “banana chip selling business”, creates a powerful illusion. As an entrepreneur and business owner she is now seen to be poised to reap the potentially unlimited benefits of the liberalised and globalised economy. All that is standing between her and economic success is hard work, passion and persistence (plus perhaps some training and a micro-loan).

Yes, the state still needs to sort out infrastructure, the regulatory burden and so on, but it is up to the newly discovered and frequently celebrated army of everyday entrepreneurs to march forth and create a better future for themselves, their families and their communities.

In other words, widespread acceptance of broader and more inclusive conceptions of entrepreneurship runs the risk of letting the state off the hook. If the poor are all deemed to be entrepreneurs and business owners, what will motivate politicians, policy makers and state officials to be focused and serious – and above all imaginative – in relation to the welfare and well-being of those who are struggling? Petty trade, coping or entrepreneurship – language really does matter.


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